When it comes to running payroll, you can either do it yourself or hire one of the many payroll services to do it for you. The difference between those two options is a matter of determining whether you have the spare time and patience to navigate convoluted tax laws all while running a company. But if you consider yourself to be especially tax-savvy, maybe hiring a payroll service isn't necessary. With the knowledge in our back pocket that payroll services exist and are a reliable backup plan, let's explore the other path, the one less taken: DIY payroll.
The first step to running your payroll is having your employees fill out a W-4 form. This form is used to track personal allowance and document each employees' filing status. On the W-4, there is a line that asks for an Employer Identification Number, or "EIN," a number that's unique to your company like your SSN is unique to you. Filing for an EIN is the second step before you can begin running payroll, and you can do so on the IRS site. Keep in mind; states often require you to file for a state EIN that is different than your FEIN. Once you have your employees' W-4s and your company's EIN, it's time to set up your payroll schedule. Since labor laws have hefty fines for failing to comply with their strict deadlines, it's best practice to set a payroll schedule that includes dates for paying your employees, as well as filing and paying the associated taxes on time. After you set up your payroll schedule, move on to the fourth step: calculating and withholding income taxes. To complete this step, utilize the IRS withholding calculator so that you keep an accurate record of withholding taxes on the employee and employer sides. Once you know how much to withhold, it's time to submit your federal, state, and local tax deposits. Depending on your business's structure and its monthly sales volume, you may submit these deposits on an annual, quarterly, or monthly basis. Finally, prepare and submit your annual filings and W-2s at the end of your tax year. Although this article is by no means a comprehensive list of your payroll duties and should not be treated as professional consultation, remember that payroll services are always available for that very reason. Read a similar article about time and attendance system here at this page.
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Outsourcing HR needs to a third-party organization, also known as a "Professional Employer Organization" (PEO), is standard practice for small and mid-sized businesses. Relying on an independent organization frees up in-house resources and streamlines tedious HR processes. Processes such as employee onboarding, legal compliance, payroll, workers comp, and other benefits, including retirement plans, can all be handled by your PEO. But, should it?
When it comes to retirement plans, it's always a good idea to get a second opinion. Seeking consult from an independent 401(k) adviser exposes you to the other available market-leading offers. This way you'll know what's available to you. But it's most certainly worth exploring what your PEO can do for your employees' retirement plans too. For instance, it will help your company access lower rates with its network of clients' combined purchasing power. That means your company will access lower rates across almost every benefit category. One of the benefits of consulting a 401(k) adviser is that you'll better understand the 401(k) fees, which you have a fiduciary responsibility to track. While accessing several low market rates across almost every benefit category sounds amazing, minute details are often lost when multiple benefit packages are bundled together. And in some cases, the bundles themselves do not offer a better value than leading market options. The only way to find out is by doing your research and comparing your options. It's also worth noting that it's not uncommon for a PEO to offer integrated payroll that automates tedious tasks like calculating hours worked or various tax deductions. These integrations streamline your operations, decrease expenditures, and ultimately make your life easier. As you decide whether to use your PEO for your employees' retirement plans, keep in mind that your company has a legal obligation to maintain and monitor its compliance with the Department of Labor. Fortunately, many PEOs cover almost all of these administrative services. Not all PEOs, however, are built equal. To ensure sufficient compliance, you'll want to partner with a PEO that offers a 3(16) Fiduciary service. The bottom line is that PEOs are a great way to cut costs, streamline operations, and increase revenue by offering your employees the best benefits like an incentivizing 401(k). So explore your options and book a demo with the PEO of your choice today! Read a similar blog about identity management here at this page. |
AuthorEmily Clarke writes about employee management, benefits and payroll service. Archives
December 2021
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